Correlation Between MGIC Investment and Custom Truck
Can any of the company-specific risk be diversified away by investing in both MGIC Investment and Custom Truck at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining MGIC Investment and Custom Truck into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MGIC Investment Corp and Custom Truck One, you can compare the effects of market volatilities on MGIC Investment and Custom Truck and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in MGIC Investment with a short position of Custom Truck. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC Investment and Custom Truck.
Diversification Opportunities for MGIC Investment and Custom Truck
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MGIC and Custom is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding MGIC Investment Corp and Custom Truck One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Custom Truck One and MGIC Investment is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on MGIC Investment Corp are associated (or correlated) with Custom Truck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Custom Truck One has no effect on the direction of MGIC Investment i.e., MGIC Investment and Custom Truck go up and down completely randomly.
Pair Corralation between MGIC Investment and Custom Truck
Considering the 90-day investment horizon MGIC Investment is expected to generate 9.59 times less return on investment than Custom Truck. But when comparing it to its historical volatility, MGIC Investment Corp is 2.11 times less risky than Custom Truck. It trades about 0.13 of its potential returns per unit of risk. Custom Truck One is currently generating about 0.6 of returns per unit of risk over similar time horizon. If you would invest 356.00 in Custom Truck One on August 28, 2024 and sell it today you would earn a total of 232.00 from holding Custom Truck One or generate 65.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MGIC Investment Corp vs. Custom Truck One
Performance |
| Timeline |
| MGIC Investment Corp |
| Custom Truck One |
MGIC Investment and Custom Truck Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGIC Investment and Custom Truck
The main advantage of trading using opposite MGIC Investment and Custom Truck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGIC Investment position performs unexpectedly, Custom Truck can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Custom Truck will offset losses from the drop in Custom Truck's long position.| MGIC Investment vs. MBIA Inc | MGIC Investment vs. NMI Holdings | MGIC Investment vs. Essent Group | MGIC Investment vs. Assured Guaranty |
| Custom Truck vs. PROG Holdings | Custom Truck vs. McGrath RentCorp | Custom Truck vs. Mega Matrix Corp | Custom Truck vs. FTAI Aviation Ltd |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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